Marina Dock Age, September/October 2007

Structuring dry stack rates
by Dennis P. Kissman

Over the past 12 years, I have written several articles on establishing rates for dry stack marinas. During this time there have been some dramatic changes in the size of the boats being stored, the types of lifting-equipment that have been used to stack them, and the structures built to store them. With all the changes that have evolved over the years, it is a good time to revisit how dry storage rates should be structured.

Solutions
One of the ways that some of the newer dry stack facilities are approaching this problem is by selling the individual racks to boaters. This approach has been very successful in some markets where land costs are very high or a perceived supply and demand imbalance exists in a high socioeconomic market area. However, it should not be viewed as an industry-wide solution to overcome higher development costs.

Our research has shown that in certain markets the number of potential rack buyers is significantly less than the total available market. When considering the expansion of an existing dry stack facility or developing a new one, always think about it from the standpoint of operating it as a rental operation.

This brings us to how rates should be structured in order to determine if the project is economically viable as a rental operation. First, understand the market you are intending to serve to see what pressures you will have on structuring and setting your rates. Ask yourself what are the storage alternatives? Are the boats in your market of the type that could easily be stored on trailers and transported over the road? Is there open land with little restrictions for storing boats on trailers? Are there off-water buildings where boats can be stored indoors? Are the boats in the market area of such a value that they warrant the services you will offer?

Do not overlook the economic demographics of the local market. For example, a market area in which the average household income is $35,000 will be different than if the average household income is $135,000. Keep in mind that other than the cost of the underlying land value, the construction costs of like structures of similar physical size and equipment to handle the boats in either market will be approximately the same. The point is, don’t get caught up with the current fad that says because boats are getting bigger, all marinas everywhere need to be targeting the big-boat market.   Continue »

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